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Credit Worthy News

Landmarks Illinois Celebrates Stony Island Arts Bank

Posted by Katherine Ferguson on Thursday, October 20, 2016

Over the weekend, Stony Island Arts Bank was honored at Landmarks Illinois’ 2016 Richard. H. Driehaus Foundation Preservation Awards. This program is designed to recognize “extraordinary stories of people saving special places throughout the state and show how historic restoration has a positive impact on communities, the environment and the people of Illinois.”

Stony Island Arts Bank is the recipient of this year’s Rehabilitation Award. In addition to its role in the community as a gathering and education space, Stony Island is an example of excellent rehabilitation effort and creativity to repurpose the building for a new use. The transformation of the badly water-damaged west offices into a two-story library housing the collections of the Johnson Publishing Company (publishers of Ebony and Jet Magazine) and the basement, submerged in water for several years, were notable to the panel of judges.

8_StonyIsland_AFTERBankingHall_creditMHA.jpg| Banking Hall

10_StonyIsland_AFTER2ndFlrOffice_creditMHA.jpg
| 2nd Floor Office

14_StonyIsland_AFTER2ndFlrWestOffice_creditMHA.jpg
| West Offices

4_StonyIsland_AFTERBasement_creditMHA.jpg
| Basement

In addition to the physical rehabilitation of the building, the award is an acknowledgement of the impact that artist Theaster Gates, developer of the project, and the Rebuild Foundation have had on Chicago’s South Side with their “pioneering approach to community revitalization.”

Congratulations yet again to this well-deserving rehabilitation and historic tax credit project that we are honored to be a part of.

Topics: MHA Midwest, Awards

Commission on Chicago Landmarks Honors Outstanding Preservation Projects

Posted by Katherine Ferguson on Thursday, October 13, 2016

In a reception held today at the Chicago Athletic Association, the Commission on Chicago Landmarks will honor four MHA Midwest projects among their 2016 Preservation Excellence Award winners. The Commission’s annual Preservation Excellence Awards recognize outstanding rehabilitation projects that involve notable improvements to Chicago local landmarks.

Congratulations to four of our MHA Midwest clients among the esteemed honorees this year:

NICHOLS TOWER
Client: Foundation for Homan Square

11_NicholsTower_AFTER14thFloor_creditDarrisLeeHarris.jpg| Credit: Darris Lee Harris Located in Chicago’s West Side community of North Lawndale, the 14-story Nichols Tower at Homan Square was originally known as the Sears, Roebuck & Co. Merchandise Building Tower, the tallest structure within the Sears Company’s former administrative headquarters and mail-order complex. Part of the Foundation for Homan Square’s initiative to re-envision the abandoned complex and revitalize the surrounding community, the seven-year $17 million rehabilitation of the Tower was completed in the fall of 2015. Retaining many of its original features and finishes, the 14-story building now houses multiple non-profit organizations and a 14th floor observation room for community use. MHA Midwest served as historic tax credit consultant on the project and prepared the building’s local landmark designation.

 

ARC at OLD COLONY
Client: CA Ventures LLC and MCJ Development

ARC_OldColony.jpg Originally constructed as a downtown office building in 1893, Chicago’s Old Colony Building continued to house office tenants into the 2010s but lost its historic appeal due to many outdated renovations. CA Ventures LLC acquired the building in 2014 and completed a $61 million rehabilitation including restoration of the building’s masonry facades and the uncovering of the long-hidden main entrance archway and columns. Inside, CA Ventures LLC transformed the 17-story Old Colony Building into ARC at Old Colony, a 204-unit student housing complex with restored entry lobbies at the ground floor, and historic 1890s office features incorporated into upper floor residential units. The sensitive rehabilitation of the Old Colony Building has ensured the future of one of Chicago’s earliest skyscrapers for decades to come. MHA Midwest served as historic tax credit consultant on the project.

 

CHICAGO ATHLETIC ASSOCIATION
Client: AJ Capital Partners

Chicago_Athletic_Association_Hotel.jpg Located along historic Michigan Avenue in downtown Chicago, the Venetian Gothic style Chicago Athletic Association (CAA) was completed in 1893 as a private athletic club for men (and in the late 20th century, women) of the Chicago elite until 2007. AJ Capital Partners and Commune Hotels & Resorts took ownership of the vacant CAA in 2012 and transformed the intricately detailed structure into a 241-room hotel that opened in May 2016. The rehabilitation restored the terra cotta and brick façade, and rehabilitated interior features bas-relief woodcarving, 19th century stained glass, and ornate marble staircases. Historic club rooms and athletic facilities have been transformed into new hotel lobbies, bars, restaurants, event spaces and fitness areas, and a new sensitive rooftop addition houses a new bar with spectacular views of Chicago’s Millennium Park and Lake Michigan. MHA Midwest served as historic tax credit consultant on the project.

 

CHICAGO MOTOR CLUB
Client: MB Real Estate

11.4.15_Timmys_MotorClub.jpg As American automobile ownership expanded in the early twentieth century, the Chicago Motor Club was a downtown haven for early cross-country motorists. This 1928 Art Deco gem housed club offices along with a grand three-story high lobby lined with help counters and a large 29 foot-wide road map painted by artist John Warner Norton. After standing vacant for over a decade and threatened with demolition, MB Real Estate purchased the building in 2014 and undertook a $38 million rehabilitation that converted the 17-story Chicago Motor Club to a 143-key hotel. In addition to extensive exterior rehabilitation, the three-story ground floor lobby, including the large Norton mural, was restored. A 1928 Model A was installed on a lobby mezzanine as a nod to the year the Chicago Motor Club opened its doors. Rehab architects Hartshorne Plunkard created an exquisite LEED-certified design that provided modern hotel accommodations while preserving the building’s original Art Deco features. MHA Midwest served as historic tax credit consultant on the project.

 

Topics: MHA Midwest, Awards

MHA Receives 2016 Wintrust Housing Partners in Innovation Award

Posted by Katherine Ferguson on Tuesday, October 11, 2016

9.28.16_MercyHousingAward.jpgJohn Cramer, MHA Midwest Senior Associate, accepts the 2016 Wintrust Partners in Innovation Award from Theresa Handley, Board Member of Mercy Housing Lakefront and a Vice President for Wintrust Financial Corporation, during the Mercy Housing Lakefront Moving Forward Together program | Photo credit: Eileen Molony

MHA Midwest was part of a project team honored on September 28th, 2016 at Mercy Housing Lakefront’s Moving Forward Together dinner for our work on The Lofts on Arthington in Chicago. MHA Midwest along with our fellow project partners accepted the 2016 Wintrust Partners in Innovation Award, given by Wintrust Ventures to community leaders and organizations that are catalysts for change.

Since 2011, MHA Midwest served as historic tax credit consultant for Mercy Housing Lakefront on The Lofts on Arthington, a $60 million conversion of the former Sears, Roebuck and Company Merchandise Development and Laboratory (MDL) Building to affordable rental housing.

The MDL Building is one of four original main buildings of the Sears, Roebuck and Company Mail Order Plant, a sprawling administrative and distribution complex located in Chicago’s Homan Square community and listed in the National Register of Historic Places in 1978. Completed in 1916, the MDL Building originally served as the printing center for all of Sears’ catalogs and publications and later housed the company’s merchandise development operations and product testing laboratories. After Sears left the site in 1973, the MDL Building was only marginally used and fell into disrepair after over twenty years of vacancy.

Scheduled for completion in 2017, The Lofts on Arthington will house onsite educational services and 181 one- to four-bedroom affordable housing units for 600 residents, including 350 children.

The Lofts on Arthington is MHA Midwest’s third major rehabilitation project at the former Sears complex – the Sears Power House was completed in 2009 and Nichols Tower in 2015 – and will help continue the exciting revitalization of Chicago’s Homan Square community.

The recipients of the 2016 Wintrust Partners in Innovation Award for The Lofts on Arthington included:

  • Applegate & Thorne-Thompson PC
  • Chicago Department of Planning and Development
  • Chicago Housing Authority
  • Chicago Realty Company
  • Citi Community Capital
  • DENCO Construction LLC
  • Environmental Solutions, Inc.
  • Federal Home Loan Bank
  • First Eagle Bank
  • James McHugh Construction Company
  • MacRostie Historic Advisors LLC
  • Nationwide Insurance
  • RBC Capital Markets
  • Alderman Michael Scott Jr.
  • Solomon Cordwell Buenz

9.28.16_MercyHousingAwardgroup.jpg | Photo credit: Eileen Molony

MHA is proud of our role in this important historic rehabilitation. Congratulations to all of our project partners on the 2016 Wintrust Partners in Innovation Award and to Mercy Housing Lakefront on this outstanding affordable housing development.

 

Topics: MHA Midwest, Awards

The Financial Benefits of Chicago's Class "L" Designation for Historic Properties

Posted by MacRostie Historic Advisors on Thursday, September 10, 2015
Wrigley Building | Photo Credit: Jon Miller of Hedrick Blessing Photographers
Wrigley Building | Photo Credit: Jon Miller of Hedrick Blessing Photographers


Chicago appreciates its architecture more than most cities. And it should. This city was the crucible for arguably the most influential American architectural events in the late 19th and early 20th centuries:  the 1893 World’s Columbian Exposition which sparked a renaissance of neoclassical architecture throughout the country, and birthplace of the skyscraper, a product of “Chicago School” engineering, innovation, and design.

Chicago is also a leader in creating developer incentives for the preservation and reuse of historic buildings. Acknowledging the positive impact of the City’s historic built environment on the local and regional economy, the Cook County Class “L” Property Tax Incentive Program was created in 1997 to offer specific financial incentives for rehabilitation of buildings designated as Chicago Landmarks. 

Under the Class “L” program, owners of qualifying commercial and industrial properties designated as “landmarks” and undergoing “substantial rehabilitation” can have their property tax assessment levels reduced for a twelve-year period.  Where commercial and industrial properties are typically assessed at 25% of market value, Class L buildings are assessed at only 10% for ten years, 15% in year 11 and 20% in year 12.

Old Republic Building To qualify, owners must invest at least 50% of the Assessor’s full market value of the landmark building in an approved rehabilitation project and must be determined a Class “L” property prior to the commencement of construction. The ordinance is intended to foster projects that contribute to long-term growth in the economy, employment opportunities, and property tax base of the city and Cook County.
The incentive applies to the assessment of the building only. The land continues to be assessed at the standard levels of assessment for commercial property and industrial property (i.e., 25% of market value), except where the entire building has been vacant for at least 24 continuous months prior to application for the incentive, in which case, the incentive assessment levels apply to the land as well as the building.

In Chicago, developers frequently utilize the Class “L” incentive in conjunction with the federal 20% historic rehabilitation tax credit as the two programs share many of the same requirements:

  • Both require that a building be designated as historic (that means Chicago Landmark status for the Class “L” program and National Register designation for the federal program).  
  • Both require a baseline investment in the rehabilitation work (that’s 50% of the Assessor’s opinion of the building’s full market value for the Cook County program and 100% of the building’s adjusted basis for the federal tax credits).  
  • And under both programs, the rehabilitation work is required to meet the Secretary of the Interior’s Standards for Rehabilitation.

 

Virgin HotelIn our experience and in that of our clients, these incentive programs generally complement each other and there is often an economy of scale in pursuing concurrent applications and coordinating project reviews with the applicable local, state, and federal agencies.
The programs are also complementary in how they deliver financial incentives for a rehabilitation project. The federal program provides a tax credit equal to 20% of total qualifying rehabilitation expenses (both hard and soft costs) that can be monetized to bring equity into a transaction while the project is under construction.  The Class “L” is a benefit that impacts annual operating expenses.

It is worth noting, that the proceeds of federal historic tax credits may not be used to satisfy the Cook County investment requirement.

Given these considerations, it is clear why developers are actively utilizing the Cook County Class “L” Property Tax Incentive, a powerful preservation tool for the City of Chicago that is much more carrot than stick.

Post by Allen F. Johnson, Partner | Director, MHA Midwest and special contributor Elizabeth L. Gracie, Partner in the law firm, O'Keefe Lyons & Hynes

Topics: policy, Chicago, O'Keefe Lyons & Hynes, HTC, MHA Midwest

Historic Tax Credit Programs Make States Economically Competitive

Posted by MacRostie Historic Advisors on Friday, July 10, 2015
Historic Lincoln School Apartments | Shawano, WI
Historic Lincoln School Apartments | Shawano, WI
Completed in October 2014, this former high school was converted to a 24-unit affordable housing apartment building. 

State tax credit programs come in many shapes and sizes, but one commonality is the economic impact they have of bringing investment to historic cities throughout a state. Many of these cities have historic resources related to a period of industry that certainly once shaped the community but now sit abandoned. Repurposing these buildings is a viable and important path to reinvestment. 

Another commonality is that state historic tax credit programs are often threatened from the beginning, as there is inevitably a debate between the dollars coming in as investment versus the dollars going out as tax credits.

Just such a debate has been ongoing in Wisconsin for the past year. Governor Walker proposed to cap the state tax credit program, which was just raised to an uncapped 20% program in January 2014, while the legislature has been working to preserve it in its current form. Since the program change, just 18 months ago, 25 projects have utilized the 20% credit resulting in an estimate of $480 million in construction spending and $88.7 million in annual operations according to a study done by Baker Tilly.

As consultants on historic rehabilitation projects, we often see immediate results on these state programs once they are signed into law. “Our Midwest Office noticed a surge in the volume of Wisconsin rehabilitation projects in 2014 and 2015 due to the new state credit, including more small and medium sized projects which may not have been viable without the added bump from the increased state credit,” notes MHA partner and Midwest director, Allen Johnson. “We are also seeing projects being undertaken in small towns and cities where previously our work was wholly in Milwaukee.”

The good news is that the Wisconsin legislature prevailed and the program will not change in the coming year.

Meanwhile another scenario is playing out in North Carolina where several tax credit programs, mostly targeted at the state’s large resource pool of historic mills, have been allowed to sunset despite showing a strong economic impact since their creation in the late ‘90s. Myrick Howard, President of Preservation North Carolina, noted in his recent op-ed piece for the News & Observer that “the revival of downtown Durham, Raleigh, Winston-Salem, Asheville, Salisbury, Mount Airy, New Bern and Edenton, to name a few, hasn’t been coincidental. Nearly $2 billion have been spent by the private sector, stimulated by this statewide incentive.”

NODA Mills | Charlotte, NC
NODA Mills | Charlotte, NC

Wisconsin is fortunate to have preserved its credit and will certainly have a competitive advantage when it comes to attracting developers, especially from another state in its region, Michigan, which lost its state historic credit several years ago. Developers that are experienced in using the historic tax credit programs are expanding beyond their home states in order to take advantage of these benefits elsewhere.

In a time of shrinking state budgets and less federal support, legislatures often look to “grow” their state budgets by eliminating historic tax credit programs despite several studies that show there is a positive return on investment from these programs. In addition to the construction dollars and jobs generated by rehabilitation projects, there is a long-term affect at the local level of taking a building that may have been completely off the tax roles and returning it to use, which generates increased real estate taxes that often funds schools or other local infrastructure.

Hopefully North Carolina and other states will follow Wisconsin’s lead in supporting programs that can have a significant economic at the local level while knitting back together the architectural fabric that makes these cities and towns whole.

Written by Albert Rex, Partner and Director of MHANortheast

Topics: historic tax credit, North Carolina, Wisconsin, MHA Southeast, MHA Midwest, state policy